How does your practice compare?

A benchmarking service for the Australian accounting profession since 2001, the Good Bad Ugly report offers an annual snapshot, or “state of the nation”, for accounting practices. Its 2017 paper offers data on several key performance indicators (the 2018 data has been collected but has not yet been released as a complete report).

Good Bad Ugly is run by Business Fitness, which takes information from a cross-section of accounting firms across the country, including city-based, suburban and regional firms of all sizes, from sole-practitioners to large multi-office, multi-level firms.

First of all, looking at an overview of the trends in services provided from June 2010 to June 2017, the average accounting firm’s tax compliance service work has moved from an average of 70% dropping to around 59%. Business advisory services offered have increased over the same period from just shy of 10% to around 18%. Tax planning has proved relatively steady, with a slight increase from 5% to 6.6%, and SMSF services has increased from about 8% to 10.4%.

In cash flow terms, the average work-in-progress days are 25, with debtor days at 52. Interestingly, the study found that 10% of firms do not charge time to work-in-progress.

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Team profiles show an average partner number of just two, with “chargeable” staff (or FTEs – full time equivalents) of eight and total teams of 13.7 FTEs. Staff per partner (termed “leverage” in the report) shows an average of 5.4. The average salary is recorded at $73,181, but a notional partner salary is noted at $200,000. This gives partner productivity (chargeable time) of 45.7%, or a “return on effort” of $190 an hour.

With an average of 280 clients per partner, and an average client fee of $3,575, the cost of client acquisition sits at $223. The acquisition rate is 6.8% and attrition 2.1%.

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